Drawing on its accumulated knowledge and experience, OLAF helps the authorities responsible for managing EU funds – inside and outside the EU – to understand fraud types, trends, threats and risks, and to protect the EU's financial interests by preventing fraud of all kinds.
OLAF gathers data from its own operations, investigations and many other sources. These include:
- Commission audits
- Court of Auditors reports
- national partner authorities
- open sources, such as the internet, press articles and public registers
- commercial sources.
As well as using this information for its own investigations, OLAF shares it through databases and applications: with other Commission departments through the Irregularity Management System and with EU Member States through the Early Detection and Exclusion System.
Irregularity reporting: Irregularity Management System (IMS)
EU law requires reporting in areas where the EU provides financial support. EU countries must report cases of irregularities in expenditure to the Commission, including suspected and established fraud.
The IMS enables EU countries and candidate countries to report irregularities related to expenditure to the Commission. IMS is managed by OLAF. It contains details offraud and irregularities in the use of funds managed by the national authorities, such as agricultural, European Structural and Investment Funds.
The IMS is open to all Commission departments on a need-to-know basis and is used for the following purposes:
- analysis and reporting (e.g. the annex to the PIF-Report)
- supporting policy initiatives
- supporting OLAF’s case selection process
- preparing for audits
- deciding whether to sign off the accounts for previous operational programmes
- replying to questions from the European Parliament.
Early Detection and Exclusion System (EDES)
EDES is a system established by the Commission to reinforce the protection of the Union's financial interests and to ensure sound financial management for direct and indirect expenditure. It replaces the Early Warning System and the Central Exclusion Database as of 1 January 2016.
EDES aims to:
- ensure the early detection of risks threatening the EU’s financial interests
- exclude an economic operator from receiving EU funds
- impose a financial penalty on economic operators breaking EU rules.
Authorising officers can exclude unreliable applicants from EU funding or flag suspicions. They do this based on:
- the findings of OLAF investigations
- the audit findings of EU institutions and bodies
- reports on irregularities detected by Member State authorities and organisations (e.g. international organisations) that implement EU spending programmes.
EDES has 2 main parts:
- Early Detection
This part of EDES contains information on people, companies and organisations that could pose a fraud threat to the EU’s financial interests.
The exclusion branch of EDES contains details of people, companies and organisations who are banned from direct and indirect EU funding. This might be because they:
- are bankrupt
- have been found guilty of fraud, corruption or other serious crimes or of serious professional misconduct
- have seriously breached the terms of a previous EU contract.
EU countries and entrusted entities apply their own rules when deciding what action to take if an entity is recorded as ‘excluded’ in EDES.
All authorising officers in EU institutions, bodies and agencies and their staff can access EDES on a need-to-know basis. Read access to the exclusion branch only is available to Member State authorities and entities that implement EU spending programmes.
OLAF produces casebooks of anonymised cases. These highlight:
- fraud indicators (‘red flags’)
- techniques used by fraudsters (‘modus operandi’)
- certain work processes that are potentially vulnerable to fraud which may be used in some Commission departments, EU institutions and bodies.
Areas covered so far include:
- internal investigations (2017)
- external aid (2012)
- structural funds (2011)
- research projects (2010)
Casebooks are made available to interested Commission departments and, if relevant, to other institutions and bodies and Member State authorities.
OLAF issues recommendations on anti-fraud measures to Commission departments, EU institutions, bodies, offices and agencies. Its recommendations are made:
- based on analysis,
- after an investigation, or
- in response to draft Commission legislative proposals.
If OLAF detects systemic problems, it may alert the Commission’s internal auditors.
Areas where OLAF has made recommendations include:
- infringement of public procurement rules
- conflicts of interest in recruitment or in the attribution of funds
- research projects (inflated staffing costs, plagiarism, fraudulent use of company names to obtain grants)
- customs transit procedures
- undervaluation of goods
- reimbursement of removal costs of EU staff.
OLAF organises training on fraud prevention and detection for Commission auditors (internal and external), and contributes to fraud awareness seminars for EU countries and candidate countries. It also provides basic training on analytical tools and training for financial officers and managers on risk indicators.